14 Dec 2016

Price volatility: MEPs call for new risk and crisis management tools

To help farmers cope with volatile prices, the EU must develop new risk and crisis management tools and strengthen their bargaining position in the food supply chain, says a non-legislative resolution Parliament adopted on Wednesday. The supply chain should be made more transparent and the EU budget more flexible, so that funds can be deployed faster to tackle crises, add MEPs.

“Due to the extent of the [farming] crisis and the lack of hope in the agricultural sector it is very important that we address the matter of [price] volatility (…) The idea is very simple: get the Commission to make proposals to do something about it”, said rapporteur Angélique Delahaye (EPP, FR) during the debate before the vote.

“We must strengthen contractual relations in the food chain, make sure that the CAP has proper risk management tools and uses them, set up price observatories and enhance ones that we already have to ensure markets are transparent and finally improve crisis management tools so that we can respond more quickly and more effectively to emergency situations”, she added. Her resolution was adopted by 445 votes in favour to 148 against, with 89 abstentions.

New tools to fight price volatility…

The current Common Agricultural Policy lacks effective tools to address growing market volatility and to help farmers cope with price changes, says the resolution. Existing risk management tools, such as mutual funds, income stabilisation and insurance are implemented slowly, unevenly and are poorly funded, it adds.

The EU must therefore develop new climate, health and economic risk management tools, as well using existing ones to the full, to safeguard the EU’s food autonomy, ensure competitive and sustainable farming on the continent and encourage new entrants, MEPs say. These new tools should be fairer, more efficient and responsive, but also affordable for farmers and properly funded, they add.

MEPs also called on the Commission to come up with a legislative proposal to outlaw unfair trading practices in the food supply chain that could lead to or increase price volatility.

…and tackle crises

The EU Commission should develop complementary public and private sector tools for crisis prevention and management, along with tailored and binding early-warning systems, and study ways to prevent and combat price volatility crises through countercyclical aids, MEPs say. They also insist that the so-called “crisis reserve” should be kept outside the EU budget, to make it more flexible.

Farmers must be better informed about ways to make their holdings more competitive and on options available to them when it comes to risk management, market data and volatility, MEPs say. They call on the EU Commission and member states to organise awareness-raising campaigns and adapt their training programmes to this end.

Boosting farmers’ bargaining power

The resolution calls on the Commission to align EU competition policy with the specific needs of the agricultural sector and boost farmers’ negotiating power in the food supply chain by introducing standard, transparent, balanced and collectively negotiated contracts laying down inter alia prices for products and payment periods. The size of a producer organisation representing farmers in collective negotiations should ideally correspond to that of its negotiating partner, MEPs say.

Enhancing supply chain transparency

Information on prices and costs must be made timelier and easier to access for all supply chain stakeholders, MEPs insist. They call for an EU-wide electronic map providing real-time information on the availability of agricultural products, EU agricultural price observatories covering the entire chain from producer price to final retail price, and sufficient funding to enable observatories to make recommendations, too.